Debt Consolidation Calculator – Compare Your Savings

Juggling multiple credit cards and loans can be stressful, especially when each one has a different interest rate, due date and minimum payment. A debt consolidation loan can turn several payments into one, but it is not always a guaranteed money saver. This debt consolidation calculator helps you compare your current debts with a new loan so you can estimate your monthly payment, payoff time and total interest cost before you decide whether consolidation is right for you.

In the sections below, you will see how the calculator works, what debt consolidation really does, when it can save you money and when it might backfire, plus alternatives to consider if a new loan is not a good fit for your situation.

How this debt consolidation calculator works

The HonestCredit Debt Consolidation Calculator is built to answer one core question: “Will a consolidation loan actually improve my situation?” Many online tools only show what your new monthly payment might be. This calculator also shows how long it may take to become debt-free and how much interest you might pay if you consolidate compared with keeping your current debts, so you can see the full picture rather than just a lower payment.

To use the calculator effectively, start by entering each unsecured debt you want to include:

• Debt name: For example, “Credit card #1,” “Store card,” or “Personal loan.”
• Balance ($): Your current payoff amount for that account.
• APR (%): The annual percentage rate for that debt. This matters most for credit cards and personal loans.
• Monthly payment ($): The amount you are currently paying toward that debt each month (at least the minimum; you can enter a higher payment if you are already paying more).

You can add or remove debts so the list in the calculator matches your real situation. The tool then automatically totals your balances and monthly payments and estimates how long it would take to pay everything off if you kept paying the same amounts. As you adjust your numbers, the results on the right side refresh automatically.

Next, you define a potential consolidation loan:

• Total to consolidate: By default, this equals the sum of your listed balances, but you can adjust it if you plan to consolidate only part of your debt.
• Consolidation APR: The annual percentage rate for the new loan, including any interest rate. If you are prequalified for a personal loan or home equity loan, you can use that quoted APR.
• Loan term (years): How long you would take to repay the new loan, such as 3, 5, or 7 years.
• Origination fee (%): An optional field to account for a lender’s up-front fee (for example, 3% or 5% of the loan amount).

As you update your debts and consolidation loan details, the calculator estimates:

• How long it may take to become debt-free if you keep your current debts and payments.
• Your total interest cost over that time.
• The monthly payment, payoff time and interest cost for the consolidation loan (plus an estimate of any origination fees).
• The difference in interest paid and how your monthly payment would change if you consolidate.

The results are based on standard amortization math and assume fixed interest rates, on-time payments and no new borrowing. Actual results can differ, but the calculator gives you a realistic way to compare options side by side.

What is debt consolidation and what does it actually change?

Debt consolidation means combining multiple debts into a single account, typically through a personal loan, home equity loan, home equity line of credit (HELOC) or balance transfer credit card. Instead of sending several payments to different lenders, you make one payment each month on the new loan.

In practice, you or the lender use the new loan funds to pay off your existing accounts. Your old balances go to zero, and you now owe the balance on the consolidation loan instead. Ideally, this new loan has:

• A lower interest rate than your current debts.
• A fixed payoff schedule with a clear end date.
• Reasonable fees so you are not giving back all of your savings in origination charges or closing costs.

Common consolidation options include:

• Unsecured personal loans: Fixed-rate loans from banks, credit unions and online lenders. These are often used to consolidate credit card debt.
• Home equity loans or HELOCs: Loans secured by your home, often with lower rates but higher risk because your home is on the line if you cannot make payments.
• Balance transfer credit cards: Cards that offer an introductory 0% APR period so you can pay down debt without new interest, often with a transfer fee.
• Credit union consolidation programs: Some credit unions offer special consolidation loans or lines of credit designed to help members simplify debt.

The key is that consolidation changes the structure of your debt but does not erase it. You still owe the same principal, and the real question is whether the new structure is clearly better than what you have today.

When debt consolidation can save you money

Consolidation can be a smart move when the overall math and your behaviour both work in your favor. Consumer regulators and reputable financial educators generally point out that consolidation may help if you can qualify for a loan with a lower effective interest rate and a realistic payment schedule, and if you stop adding new debt while paying off the consolidation loan.

In the calculator, look for these positive signs:

• Total interest paid goes down: Your “consolidated loan” scenario shows meaningfully less total interest (after accounting for any origination fee) than the “keep your current debts” scenario.
• Your payoff date is reasonable: The new loan ends in a similar or shorter timeframe than keeping your current payments, or it is slightly longer but still fits your goals.
• The monthly payment is affordable: You can comfortably make the new payment month after month, even if your income or expenses change slightly.

If the calculator shows that consolidation would save several hundred or thousands of dollars in interest while keeping your payoff time reasonable, that is a strong signal that the loan could be worth exploring further. This is especially true if your current debts are high-interest credit cards and you qualify for a lower-rate personal loan or home equity product.

When consolidation can backfire or cost more

Debt consolidation is not a magic fix. In some cases, it can leave you paying more interest overall or in a riskier position than before. Both the CFPB and the FTC caution that a new loan may not reduce your costs or help you get out of debt sooner, especially if it comes with high fees, teaser rates that rise later or a very long repayment term.

The calculator will often flag potential problems through its summary:

• Total interest goes up: If the “consolidated” scenario shows higher total interest plus fees than keeping your current payments, you may be stretching your debt out too long or accepting a rate that is not truly better.
• Payoff time increases dramatically: Extending a 4-year payoff into a 7-year or 10-year loan can lower your monthly payment but keep you in debt much longer, even if the rate is slightly lower.
• Fees eat up your savings: Origination fees, balance transfer fees and closing costs can wipe out much of the interest you would otherwise save.
• You keep using your old credit cards: If you do not change your spending habits, it is easy to run balances back up on now-empty cards, ending up with both the consolidation loan and new credit card debt.

If the calculator shows that you would pay more interest overall or stay in debt significantly longer just to get a lower monthly payment, that is a red flag. In that case, it may be better to adjust your budget, increase payments on your highest-rate debts or consider other forms of help rather than taking on a new loan.

How to use this calculator step by step

To get the most realistic picture from the Debt Consolidation Calculator, follow these steps:

1. Gather your statements.
   Collect recent statements for all the debts you want to include: credit cards, personal loans, medical payment plans and other unsecured debts. Note each balance, APR and minimum payment.
2. Enter each debt into the calculator.
   List each account with its balance, APR and monthly payment. If your payment fluctuates (for example, if you usually pay more than the minimum on a card), enter what you realistically plan to pay going forward.
3. Review your “current path” results.
   Before adjusting the consolidation loan, look at how long it may take to become debt-free and how much interest you are on track to pay if you simply continue the payments you entered. This helps you see the problem the consolidation loan is meant to solve.
4. Enter a realistic consolidation loan scenario.
   Use the best rate and term you believe you could qualify for, based on prequalification offers, your credit score range or lender rate tables. Include any expected origination fee in the fee field.
5. Compare payoff time, interest and monthly payment.
   Focus on the three key numbers: the new monthly payment, total interest and the time to become debt-free. Ask yourself whether the trade-offs (for example, a lower payment but more years in debt) match your goals and risk tolerance.
6. Stress-test your plan.
   Adjust the APR and term slightly higher or lower to see how the results change. This helps you understand how sensitive your plan is to interest rate changes or different loan offers.
7. Consider what happens if you do nothing.
   Remember that “staying where you are” is also a decision. If the calculator shows that your current payoff path is already relatively short with manageable interest, consolidation may not be necessary.

Alternatives if a consolidation loan is not the right fit

If the calculator suggests that consolidation would not save you money, or you cannot qualify for a loan with a better rate, there are still other ways to tackle debt. Reputable sources often highlight several alternatives that may fit better, depending on your situation.

• Debt snowball or avalanche methods: Instead of borrowing again, you can use structured payoff strategies like snowball (smallest balance first) or avalanche (highest rate first) to pay down debts faster with the money you already have.
• Balance transfer credit card: If your credit is strong, a 0% introductory APR balance transfer card might give you a window to pay down debt interest-free, though transfer fees and post-promo rates matter a lot.
• Nonprofit credit counseling and debt management plans: A reputable credit counseling agency can help you create a budget and may offer a debt management plan (DMP) that consolidates payments and negotiates lower interest rates with creditors.
• Hardship programs or loan modifications: If you are struggling to keep up with payments, some lenders and servicers have hardship programs, temporary forbearance or modified payment options.
• Formal debt relief options: In severe situations, solutions like debt settlement, bankruptcy or country-specific legal procedures may be appropriate, but they come with serious credit and legal consequences and should be discussed with a qualified professional.

No single strategy is right for everyone, and you may combine approaches over time. What matters most is choosing a plan you understand, can realistically afford and can stick with until the debt is gone.

Summary

Debt consolidation can make managing debt easier by replacing several payments with one, but it is not automatically a better deal. A good consolidation loan usually has a lower effective interest rate than your current debts, manageable monthly payments and a realistic payoff timeline. A weak consolidation offer can stretch your debt out, add fees and increase the total interest you pay over time.

The HonestCredit Debt Consolidation Calculator goes beyond just showing a new monthly payment. It compares payoff time, total interest and monthly cash flow for both your existing debts and a potential consolidation loan so you can quickly see whether the numbers work in your favor. Use it alongside a realistic budget, a clear plan to avoid new debt and, if needed, guidance from a reputable nonprofit credit counselor to choose the best path forward.